A Review of Chinas Third Patent Law Amendments

1
A Review of Chinas Third Patent Law Amendments

• Jon Santamauro, Counsel, Sidley Austin LLP
• Phone [phone] Email jsantamauro_at_sidley.c
  om
• BIO Intellectual Property Counsels Committee
• March 2009

2
Overview

• China Patent Law Third Amendments
• Passed December 27, 2008
• Entry into force October 1, 2009
• Draft Regulations Pending
• The Amendments address numerous areas
• Patentability and Filing
• Requirements relating to inventions relying on
  genetic resources
• Compulsory Licenses
• Infringement and Enforcement Matters
• Joint Ownership

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Patentability

• Definition of prior art
• Article 22 defines prior art as any technology
  known to the public in the country or abroad
  before date of filing.
• Adopts absolute novelty approach
• Prior law defined prior art to be publications in
  China or abroad but limited public use or
  publicly known prior art in China.
• New sources of foreign prior art for validity
  challenges, etc.
• Still subject to narrow 6-month grace period
  (Art.24) for disclosures made at international
  exhibitions, disclosure made at academic or
  technical conference, or where information is
  disclosed without consent of the applicant.

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Patentability Double Patenting

• Prohibition on double patenting
• For any identical invention-creation only one
  patent right shall be granted
• Clarifies that when same applicant applies for
  both patent and utility model patent, applicant
  may abandon utility model patent if the term has
  not expired to obtain invention patent

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Foreign Filing Requirement

• Article 20 foreign filing for inventions
  completed in China
• Previous law required Chinese individuals or
  entities to file first in China for any invention
  made in China
• New law applies to any individual or entity,
  but permits foreign filing where invention made
  in China after an examination of
  confidentiality (security review)
• If applicant does not apply for security review
  and files in foreign country, no patent will be
  granted on the relevant invention

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Inventions Relying on Genetic Resources

• Article 5 prohibits patents for any invention
  that relies on genetic resources, where the
  acquisition and use of the genetic resources
  violates relevant laws and administrative
  regulations
• Draft Regulations clarify that this is grounds
  for denial of patent and revocation of granted
  patent
• Article 26, new paragraph 5
• Requires patent applicant to explain the direct
  source and original source of genetic
  resources, where completion of invention depends
  upon genetic resources
• If the original source cannot be explained,
  applicant shall state the reasons

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Inventions Relying on Genetic Resources

• Many questions regarding Article 5 and Article
  26, paragraph 5
• Amendment appears intended to implement CBD
  obligations relating to access and
  benefit-sharing of genetic resources, but draft
  Rules also currently define genetic resources
  to include human genetic resources (outside CBD
  scope)
• what are the relevant laws and regulations?
• Unclear what is intended by rely on genetic
  resources
• Rules state that this means an invention
  completed utilizing the genetic function of the
  resource
• What is the meaning of direct source? original
  source? what criteria govern when original
  source cannot be provided by the applicant

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Compulsory Licenses

• Article 48
• Restricts previous broad grounds for compulsory
  licensing to two areas
• Failure to work 3 years since the date of grant
  or 4 years from the date of filing, the patentee
  has not sufficiently exploited the patent right
  without any reasonable ground
• Draft Regulations provide that failure to
  fully/sufficiently exploit means that
  exploitation of patent by patentee cannot
  satisfy the domestic demand
• Unclear whether Article 48(1) refers to the later
  of the two dates, as required by the Paris
  Convention
• To remove or reduce negative affects on
  competition, due to acts determined to be
  violation of antitrust laws
• Link to Chinas Anti-Monopoly Laws
• Unclear how concepts such as patent abuse will
  be applied

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Compulsory Licenses

• Article 49 is maintained
• Compulsory license available in national
  emergency, extraordinary state of affairs, or
  where the public interest so requires
• Article 54 clarifies that applicant for a CL
  under Article 48(1) failure to work and Article
  51 dependent patents must prove that it has
  requested patent to permit licensing upon
  reasonable conditions, but has not obtained the
  license within a reasonable time
• TRIPS Article 31(b) provides that efforts to
  reach authorization on reasonable terms may be
  waived in cases of national emergency, extreme
  urgency or in cases of public non-commercial use
  or in respect of remedies for anti-competitive
  practices.

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Compulsory Licenses

• Article 50 Doha Paragraph 6 implementation
• For the purpose of public health, compulsory
  license may be authorized for manufacture and
  export to countries in conformity with relevant
  international treaties
• Draft Regulations detail requirements of
  paragraph 6 mechanism
• Draft Regulations also envision China as an
  importer (pursuant to Law Article 49) where it
  lacks sufficient manufacturing capacity
• Article 52
• New provision added to limit CLs for
  semiconductor technology for use in public
  interests and antitrust violations
• Amendment made to better conform to TRIPS Article
  31(c) unclear if limited to public
  non-commercial use

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Joint Ownership

• Article 15
• If there is an agreement, the agreement prevails
• If no agreement
• joint inventor may exploit individually
• joint inventor may license, but must distribute
  royalties among co-owners
• other issues requirement agreement by each
  co-owner

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Patent Infringement

• Codifies Prior Art Defense if accused infringer
  can prove his technology belongs to prior art or
  prior design, it cannot be considered an
  infringement
• Unclear whether this is includes combinations of
  prior art elements
• Article 65 compensation for infringement
  determined by actual losses if difficult to
  determine reasonable royalties
• Also includes reasonable costs incurred by right
  holder to stop infringement
• If difficult to determine losses, profit or
  royalty authority to determine compensation of
  RMB 10,000 1,000,000 (approx. 150,000)

13
Patent Counterfeiting

• Increases in criminal penalties for patent
  counterfeiting (Art. 63) (i.e., misrepresenting
  counterfeit good as patented product)
• Fine up to 4 times illegal income (up from 3
  times)
• If no illegal income, fine up to RMB 200,000
  (approx. 29,000 USD) (up from RMB 50,000)
• Draft Regulations detail sanctions methodology
  gives SIPO power to take particular actions to
  remedy behavior
• Article 64 expands powers of authorities to
  obtain evidence in counterfeiting cases

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Patent Infringement

• Codifies process for preliminary injunctions
  (Art. 66)
• applicant to provide guarantee
• if applicant does not post bond, no preliminary
  injunction granted
• Peoples court to issue ruling within 48 hours
• If litigation not filed within 15 days since
  court order, court shall remove the order
• if any mistake, applicant shall compensate the
  losses of respondent due to stopping the relevant
  acts
• Codifies procedure for evidence preservation
  before litigation (Art. 67)
• Requires that evidence may be damaged or
  difficult to obtain later
• Court may require applicant to post bond
• Similar to preliminary injunction, court ruling
  within 48 hours and requires filing suit within
  15 days from order or it can nullify the order

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Patent Infringement Exceptions

• Adopts international exhaustion
• Article 69(1) clarifies exceptions relating to
  first sale and parallel importation to include
  imports of a patented product sold by the
  patentee
• Article 69(5) adds Naked Bolar provision
• not an infringement, if for the purpose of
  providing information for administrative approval
  to make, use or import patented medicine or
  medical treatment equipment, and to make, import
  the patented medicine or medical treatment
  equipment especially for who has the said purpose
• No corresponding patent term extension or
  restoration
• No corresponding improvement in patent linkage
  system in respect of marketing approval process

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Other Changes

• Definition of invention-creation now codified
  in the Law (Article 2)
• any new technical solution relating to a
  product, a process or an improvement thereof
• Improvements in Design Patents
• Clarifies prior art for designs
• Clarifies scope of protection
• Requirement that claims define scope of invention
  clearly and concisely now codified in the Law
• Article 19 patent agency rules
• Article 21 SIPO to publish patent gazette

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Thank You

• Contact
• Jon Santamauro
• Counsel
• Sidley Austin LLP
• Phone [phone]
• Email jsantamauro_at_sidley.com